Market Integration and Convergence to the Law of One Price: Evidence from the European Car Market

Pinelopi Goldberg and Frank Verboven

No 8402, NBER Working Papers from National Bureau of Economic Research, Inc

Abstract: This paper exploits the unique experiment of European market integration to investigate the relationship between integration and price convergence in international markets. Using a panel data set of car prices we examine how the process of integration has affected cross-country price dispersion in Europe. We find surprisingly strong evidence of convergence towards both the absolute and the relative versions of Purchasing Power Parity. Our analysis illuminates the main sources of segmentation in international markets and suggests the type of institutional changes that can successfully reduce it.

JEL-codes: F0 L0 (search for similar items in EconPapers)
Date: 2001-07
New Economics Papers: this item is included in nep-eec and nep-ifn
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Published as Goldberg, Pinelopi K. and Frank Verboven. "Market Integration And Convergence To The Law Of One Price: Evidence From The European Car Market," Journal of International Economics, 2005, v65(1,Jan), 49-73.

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Related works:
Journal Article: Market integration and convergence to the Law of One Price: evidence from the European car market (2005)
Working Paper: Market Integration and Convergence to the Law of One Price: Evidence from the European Car Market (2001)
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